BMW Multiple Security Deposits (MSD) for leasing discontinued as of May 1, 2017

[firedown31]

Originally Posted by MilehighM3

Great post

Not to mention the maintenance plan, which everyone here is jumping on the negativity band wagon about here, has zero effect on the majority of leases. Most people don't need brake replacement during their lease term. The fact that replacement isn't covered isn't even an honorable mention in my book. Why pay for what you don't need? The fact is people complained about brake dust, so BMW changed the pad composition and they last longer, with less dust. For those that do want to have the wearables added in, it's around $1k to extend to 4/50 as it used to be.

I agree why pay for something you don't need. As you say you can add back in the stuff BMW took out for $1000. But wait, did BMW reduce their MSRP across the board by $1000 when they cut the maintenance plan? Nope, they cut the coverage and MSRPs went up. No matter how you look at it BMW reducing the maintenance plan and taking out coverage options is worse for everybody.

[doug_999]

Originally Posted by mblaucoupe135

So I'm kind of new to leasing so can someone explain to me how this multiple security deposit thing works and why it's such a bad thing BMW is getting rid of it?

Lots of stuff on-line about it. Basically...A security deposit is normally required when you lease. It is the amount of your payment rounded up by $50. Well BMW would let you give them more of them (up to 8 I think) and they would lower your money factor (MF) which is basically your interest rate. You would get them all back at the end of your lease.

The downside is if you want out of your lease - then you just have to convince someone to give you that money in exchange for taking over your lease.

At the end of the day, if you were going to keep the car for the entire lease, it made a lot of financial sense to do.

[MilehighM3]

Originally Posted by firedown31

I agree why pay for something you don't need. As you say you can add back in the stuff BMW took out for $1000. But wait, did BMW reduce their MSRP across the board by $1000 when they cut the maintenance plan? Nope, they cut the coverage and MSRPs went up. No matter how you look at it BMW reducing the maintenance plan and taking out coverage options is worse for everybody.

I guess inflation has no effect on pricing? You have to face the fact that things change. It's still the best included maintenance plan.

[Djvolume]

Originally Posted by MilehighM3

If your service was that bad, why buy more cars? Why not go to another dealer? If BMW did read Internet forums for feedback, I doubt very seriously that the feedback they would value the most is from posts that have the caps lock on, p.s. and crap as its highlights.

Your posts are like teenagers threatening to commit suicide. It's just a cry out for attention because you're feeling insecure or neglected. Maybe it's because your girl or boyfriend dumped you, or your parents took away your video games or car keys. If you were serious, you would move on and satisfy your need to replace your current vehicle with another brand you feel valued your business in the moment. You wouldn't be on a random forum complaining about everything under the sun and allowing this to consume your evening.
Just my .02

Originally Posted by MilehighM3

If your service was that bad, why buy more cars? Why not go to another dealer? If BMW did read Internet forums for feedback, I doubt very seriously that the feedback they would value the most is from posts that have the caps lock on, p.s. and crap as its highlights.

Your posts are like teenagers threatening to commit suicide. It's just a cry out for attention because you're feeling insecure or neglected. Maybe it's because your girl or boyfriend dumped you, or your parents took away your video games or car keys. If you were serious, you would move on and satisfy your need to replace your current vehicle with another brand you feel valued your business in the moment. You wouldn't be on a random forum complaining about everything under the sun and allowing this to consume your evening.
Just my .02

Thanks for your reply, Although it's has zero value it was suppose to be sarcastic in a sense, but to each its own, seems like I'm not the one who has nothing to do in the evening but you rather have lots to say to something that has zero meaning to you. This is a pure example what wrong with our society. Unlike you, I have value in my money. Even thou no harm taken I rather have you taken your 2 cents and shove it.

[Fugly M3]

Not sure this has been mentioned, but my guess is they decided a tiny percentage of their lessees (not those on this board) actually put up even ONE security deposit and the whole system was essentially costing them money. So, they scrapped it.

[farns2345]

So MSD is just another way to bring down your monthly lease payment - correct? I saw a comment by someone saying BMW has low lease rates - does that mean the MSD somehow brings down the interest rate because last time I check BMW lease rates on any new or M models was 5.9% or greater which is definitely not low IMO.

[stealth-twntrbo]

Real residuals on 3's and 5's are really like low to mid 40's %. BMW NA enhances those residuals to make lease payments attractive. Buying a car off lease rarely makes sense since the actual market value at end of lease termination is much lower than the residual on average. Leasing makes much more sense than buying if you plan to sell or trade within 48 months of purchase. Buying a car is very foolish especially mass produced cars. Since cars are deprecating assets. Most often when you break the math down you can lease 2 times and spend less money than buying one car and financing it for 6 years with little to no money down. Leasing is much less expensive.

[mblaucoupe135]

Originally Posted by doug_999

Lots of stuff on-line about it. Basically...A security deposit is normally required when you lease. It is the amount of your payment rounded up by $50. Well BMW would let you give them more of them (up to 8 I think) and they would lower your money factor (MF) which is basically your interest rate. You would get them all back at the end of your lease.

The downside is if you want out of your lease - then you just have to convince someone to give you that money in exchange for taking over your lease.

At the end of the day, if you were going to keep the car for the entire lease, it made a lot of financial sense to do.

ok that makes sense thanks for explaining it.

[Medjd11]

I always do an owners choose contract bc I'm in Texas so I've never had to do any security deposits. See if your dealer in your state offer that.

[farns2345]

Never mind my earlier question on MSD's I see this is already covered in a previous response

[adc]

Originally Posted by MilehighM3

Those complaining about their leases going up 30% every month aren't very good at basic math. Think you get a better value at the Porsche store? Go run a lease on a 911 equipped the way you want one, and report. You may want to be seated when you do this, especially when you add some decent equipment. Don't forget to check your residuals there guys and gals.

The accepted wisdom was that you lease the BMW, and buy the Porsche secondhand.

Secondhand 2 year 911 S' fr she out of lease with 15k miles on them have lost a good chunk of their original purchase price ($120k - $80k or similar), which to my mind makes them attractive to buy. These cars will never go under $60k most likely, which means your depreciation on them is minuscule compared to a new BMW.

[RichP]

Originally Posted by MasterP

Oh No. Now you have to buy a car because you actually like it or because it serves your needs.

BMW's residuals have been inflated for years. I was under miles on my F30, got LMF at buy rate, tax credits and I was still negative $8k at termination.

You compare the residuals to what they got for off lease at the auctions you can see why they'd get more realistic with the residuals.

I think it's great actually. Refocus on making better products and earn the client, not buy it with special lease rates or inflated residuals.

Another +1 on this. In some ways BMWFS is operating like a Ponzi scheme with the inflated residuals, low money factors, incentives etc. Look at how how inexpensively you can lease a basic 3 series. This was never sustainable. (I just gave back my i3 on 2 year lease.. buyout was 33K, market value was about 18!)

And as it was said in the quote.. this is will force BMW to have more compelling product offering rather than relying on name and enticing leases to move product. And if they don't right the ship sooner than later.. then that money is going to be found by less R+D and lower vehicle quality in pursuit of cost-saves.

[Blubaron79]

Originally Posted by mblaucoupe135

So I'm kind of new to leasing so can someone explain to me how this multiple security deposit thing works and why it's such a bad thing BMW is getting rid of it?

It's basically like buying down the interest rate, by putting more money down.

And there is SO much whining on here. Lord Buy the car because you like it, not because of the lease rates.

[Powaup]

Bmw hates us... Im just going to ride the bus now =\.

But on a serious note. We are witnessing the end of an era. Kudos to those that leased F80 M3s for $700 a month, might wanna hang on to that lease for as long as possible

[bradleyland]

Originally Posted by MasterP

Oh No. Now you have to buy a car because you actually like it or because it serves your needs.

BMW's residuals have been inflated for years. I was under miles on my F30, got LMF at buy rate, tax credits and I was still negative $8k at termination.

You compare the residuals to what they got for off lease at the auctions you can see why they'd get more realistic with the residuals.

I think it's great actually. Refocus on making better products and earn the client, not buy it with special lease rates or inflated residuals.

You're 100% spot on about inflated residuals at BMW, but I dunno if I'd go so far as to say it's great lol. I mean, I'll take a deal any way I can get it

The other major factor for everyone to consider is that the automotive finance market is treading closely to the edge of a cliff right now. Bad indicators in the sub-prime auto lending segment have market makers wringing their hands. Lending capital is tightening up, and that's having a ripple effect. Other portions of the market are trying to anticipate the network effects.

BMW are in a tough spot because they're an independent. They don't have deep coffers of easy money to pull from, and their (relatively speaking) limited line-up means they don't have hugely profitable segments to bury losses in. You can't compare to Porsche, because Porsche doesn't play by market rules. They operate outside the food chain, to some degree. BMW has, historically, enjoyed some measure of immunity from broader market effects, but BMW's offering have trended toward the mass-market, while the mass-market has trended toward BMW. That has diminished BMW's ability to act with impunity.

[///M4ster Yoda]

Originally Posted by Powaup

Bmw hates us... Im just going to ride the bus now =\.

But on a serious note. We are witnessing the end of an era. Kudos to those that leased F80 M3s for $700 a month, might wanna hang on to that lease for as long as possible

Well I wouldn't spend $1000 a month on an M3/4 lease. I know some people do it. For that money there are a lot of great options out there. When BMW forces my hand it will be time to move on. Let's all be honest. BMWs are not really the ultimate driving machines any longer. They lost that edge when they decided to go German Toyota (Lexus).


Don't get me wrong. I love our cars but there getting very soft.

[to_riffic]

Originally Posted by Sedan_Clan

I'll wait and see how many people who are threatening to go elsewhere (...for a direct BMW competitor) actually do it.

exactly....

as if a base 911 is within someone's comparable buying power, cross shopping from a 440i

[///M4ster Yoda]

Originally Posted by to_riffic

exactly....

as if a base 911 is within someone's comparable buying power, cross shopping from a 440i

No but optioned M cars and certain Porsche models definitely are

M4 to Cayman/S

Just saw the TTRS. That looked pretty sweet also.

[pimp4cheddar]

So who else offers really competitive leases within the Luxury Arena?

[ah3nyc]

Originally Posted by pimp4cheddar

So who else offers really competitive leases within the Luxury Arena?

Infiniti, Lexus,both offer MSD too. Mercedes do too if you can get a corp discount with incentives and msd! People on this forum aren't being realistic. From a business perspective all the stuff bmw is taking away and not providing loyalty offers to long term customers is a slap in the face. I've had 12 bmws since 2004. Once my lease is up I will look around to other brands. Before it was a no brainer another bmw. Now it's not anymore.

[Herofmine]

First was free maintenance program cut now this... meh bmw will lose a lot of sales i am 100% sure!

[bradleyland]

Originally Posted by pimp4cheddar

So who else offers really competitive leases within the Luxury Arena?

When you get down to the monthly payment, no one. BMW have historically been stellar lease vehicles in the luxury segment.

People get hung up on the individual variables, but math formulae are all about results, and when you cross shop BMW, Audi, and Mercedes, BMW have historically offered more performance for your money. If you're shopping simply for luxury, they were pretty competitive across the board. It really came down to what you valued most:

Driving: BMW
Aesthetic: Audi
Luxury: Mercedes

(broadly speaking, of course)